Casino hackers

From: Popular Science

By Dan Koeppel
Kathleen Budz had been at the slots in the New York-New York casino for only a couple of hours when the big money came along.

The Chicago grandmother was seated at one of four chattering Wheel of Fortune games in the Big Apple-themed casino -- a rococo affair with a mock Empire State Building, Statue of Liberty, and Coney Island roller coaster.

The gambling device in question is a fairly typical modern Vegas slot. Three spinning reels occupy the center of the machine. Players can wager as little as a quarter, and small jackpots -- a dollar or 10 -- come along frequently enough to keep the action going. But the huge bonus prize is the real draw -- announced by an electronic display that resembles the ticking wheel on the TV game show, placed just above eye level.

As her losses mounted to more than $200, Budz fed the machine $5 tokens, pressing the Spin button almost rhythmically -- no serious slot player touches the pull handle on a one-armed bandit. To Budz, a few hundred bucks on a Vegas visit is "just entertainment."

Then it happened: The symbols on the three reels matched, and the digital Wheel of Fortune began to spin, indicating a win. On the top of the machine, the jackpot was posted: $4 million. Budz couldn't read the total; she'd forgotten her glasses. But her husband, standing behind, did. "Seven digits," he yelled. "Seven digits!"

Not long ago, a scene like this would have been incomprehensible. No single slot could pay out $4 million. Not physically, and not practically. Even in constant use, it would be impossible for any single machine to collect sufficient incoming wagers to make such mammoth paydays happen.

What made Budz rich, and what has made casinos even richer in recent years, are new digital networks that connect virtually every slot machine in every casino in the country. Wheel of Fortune, for instance, is part of the MegaJackpots system, a network within 18 states and one Native American reservation that encompasses more than 8,000 machines, about half of them in Nevada.

Because all these slots are wired together, every coin and bill inserted is monitored and tallied by banks of central computers, often hundreds of miles away. The maximum jackpot, advertised in flashing digits above each cluster of machines, mounts identically and simultaneously with each spin. The networks behind these monster jackpots are the essence of modern Vegas, a city already so wired, and so primed for more, that it's become a proving ground for digital tech at the crossroads of money, profit, crime, entertainment, illusion, and delusion.

Surveillance systems, more tested and proven than those used against terrorists, track and trade biometric data about cheaters, hackers, and scam artists. Software monitors and rewards customer loyalty. Equipment companies tinker with concepts like digital, networked blackjack. Billboards and signs are linked, controlled by remote overseers who immediately dispatch repair technicians whenever there's a glitch. And, by most accounts, over the next several years, Vegas' obsession with technology is only going to intensify. Odd thought: Sin City could become the most wired city on Earth, as many of the now discrete networks connect, grow, and spread via the Web.

Nice to see you again, Mr. Smith, and welcome to Net Vegas.

Other than Kathleen Budz and her husband, the first to know about the $4 million payday were the on-duty monitors at the Reno, Nevada, headquarters of International Game Technology, the world's largest gaming device manufacturer and the owner of most of the MegaJackpots slots in Vegas. IGT collects the revenues, pays the winners, and gives host casinos a cut. As soon as the jackpot hit, IGT's monitors showed which machine, in which casino, at which moment, had won, and how much the payout would be.

On the playing floor, New York-New York employees -- who had just received a phone call from IGT -- rushed to cordon off the winning machine. Congratulations were low-key: All jackpots need to be confirmed. "We try to keep the players cool," says IGT public relations representative Connie Fox (she's responsible for getting the big jackpot winners on the front page of the local paper). Drinks were offered to the nominal millionaires.

Meanwhile, one of IGT's local "jackpot response representatives" arrived at the hotel with a winner's kit that contained an oversize bank draft (for show) and a regular check (for real), along with legal documents and tax forms. With her was the key player in the drama, a technician who opened up the machine and began a 30-minute run of diagnostics. Finally the prize was verified. At IGT's headquarters, technicians rewound the progressive prize to base level: $1,000,000. The next big payout would come along in about 10 days. The odds of winning change constantly, but Fox says a single pull generates roughly the same likelihood of victory as the California lottery -- about 15 million to one.

Net Vegas was conceived in the early 1980s. Linked slots didn't yet exist, but for the first time mechanical units were being replaced by electronic ones, just as Pac-Man was pushing aside pinball machines in the arcades. The era began with an attempt to dispense with traditional spinning slot machine reels in favor of video displays. It didn't go well, initially. Outside of a military battlefield, there is probably no harsher testing ground for new tech than a gambling floor.

"A game," says the R&D director at IGT, Bill Wells, "needs to be productive the moment it hits the casino floor." The reel-free slots were odd-looking. Players hated them. Meanwhile, Wells and his team had developed their first notions of networked jackpots. But the rejection of video systems raised a problem: It was physically impossible to load a standard 20-inch reel with enough symbols -- or stops -- to get the odds needed for networked, multiplayer play; there were too few stops on each real.

"You can't create odds of millions to one on three or four spinners," Wells says. Five-reel units were tested. They yielded enough permutations, but confused players.

The solution came from a theoretical mathematician named Inge Telnaes. In 1984, the Norwegian scientist -- who'd left IBM to work for Bally's in Reno -- was granted a patent for an Electronic Gaming Device Utilizing a Random Number Generator for Selecting the Reel Stop Positions. The language Telnaes used to describe his Eureka concept was dry: "Players perceive larger machines," he wrote, "as being less 'good' in terms of winning and payout chances. . . . Large physical machines and a large number of reels develop an attitude in the player which . . . may be more influential on whether or not the machine is played than published figures showing the payoff odds. Thus, it is important to make a machine that is perceived to present greater chances of payoff than it actually has, within the legal limitations (in which) games of chance must operate." (italics added).

That last sentence is the guiding principle of Net Vegas.

Every game -- slots, cards, sports betting, even bingo -- is now attempting to adapt a Telnaes-style solution: Decrease the odds without increasing apparent complexity. That allows bigger prizes, which increases -- by staggering quantities -- the amount of money people are willing to gamble: In gambler-think, 10 bucks for a shot at a few thousand dollars is one thing; a hundred bucks for a shot at millions is another, even if the odds are much, much worse.

The Telnaes system, bought by IGT and licensed to other manufacturers, essentially uses one virtual slot machine reel -- with a large number of stops -- to control the more limited permutations of each traditional mechanical slot machine reel. The stopping point of the microprocessor-driven virtual reel is determined by a random number generator; the relationship between the many stops on the virtual reel and the fewer stops on the mechanical reel is predetermined by a formula, and weighted to ensure that "near misses" appear to happen often.

The gambler, in other words, is playing against three random number generators while looking at the sort of old-fashioned, mechanical spinning reels that seem to communicate a reassuring, physical limit to the odds. Even wholly digital slots often emulate the effect of a spinning reel. Telnaes' invention enabled Net Vegas to emerge. Mechanical slots with electronic odds and every conceivable theme, from Hollywood Squares to Sinatra's signature tunes, were soon linked to one another, casino by casino, offering million-dollar payouts. This was the money machine that built today's flashier Las Vegas.

In 1974, before networked slots, Vegas had about 24,500 slot machines, an average of about three for every four hotel rooms. Last year, there were 158,000 slots for 136,000 rooms. And today's slots work much harder -- earning six times more per room than 25 years ago, generating $4.8 billion in 2001 and accounting for almost two-thirds of the city's total gambling revenue (in 1974, it was less than 27 percent).

With all this cash pouring into the new Vegas, it was inevitable that thieves of all stripes -- from armed robbers to hackers -- would see the city as the mother lode. "I used to think I was chasing the real criminals," says Lt. Steve Franks, a 29-year veteran of the LVPD, who spent the early days of his career pursuing drug dealers and now runs the town's financial crimes unit. But "these guys," he says of the casino crooks, "are calculating. They plot everything out. They're efficient."

None more so than Ronald Dale Harris, whose job as a software engineer for the state Gaming Control Board was to write slot machine anti-cheating software. Harris surreptitiously coded a hidden software switch -- tripped by inserting coins in a predetermined sequence -- that would trigger cash jackpots. After retooling more than 30 machines, Harris and accomplices made the rounds, walking away with hundreds of thousands of dollars. Harris was caught when one of his confederates implicated him after being busted in Atlantic City for rigging a Keno game. In 1998, Harris was sentenced to seven years.

Harris' conviction hasn't stopped copycats. The Internet is filled with pitches for devices -- some costing as much as $500 -- that claim to fool slot machines into giving bigger payouts, or into believing you've inserted money when you haven't. Recently, scammers have used the infrared ports on their Palm organizers to trigger the coin chute door, operated by IR technology, to remain open and release more money than the machine was supposed to.

One of the newest scams involves teams of cheaters at the blackjack table, operating with high-tech equipment and a high level of coordination. The scheme starts when a player -- a miniature camera and transmitter sewn into the sleeves of his jacket -- sends pictures of the action at the table to an accomplice parked outside. The accomplice runs the card sequences through predictive software on a laptop and transmits the odds to a third hustler -- or several -- inside the casino who is wearing a pager watch. Information is relayed to the player by either hand signals or whispers. It all happens in seconds, and from time to time the caper pays off in a big way.

"These people are real, real good at what they do," says Michael Thomson, director of surveillance at the New Frontier Casino.

The casinos have responded by racing to build a covert Net Vegas: grids of new eavesdropping tools to monitor everything that goes on in and around the town's largest hotels. The casinos use various systems, but the mechanics of surveillance are basically the same: hundreds of cameras linked to banks of video recorders, software that can match physical characteristics to shared databases of the faces, names, and histories of suspicious individuals -- all run from hidden control centers.

The most sophisticated operation is probably at the Bellagio, a relatively new casino where tens of millions of dollars are spent monthly in the Italianate parlors, restaurants, and shops. Images from 1,900 cameras cycle across approximately 100 video displays, which show up to 25 different views at a time. Any view can be transmitted to a quartet of oversize plasma screens where surveillance officers can get the big picture on just about anything happening in almost any area of the hotel (not suites, mind you, but public restrooms are under the eye). The cameras trained on the Bellagio's driveway can track approaching and departing vehicles as far as a half mile. About 850 video recorders tape all the action.

Usually, three to 10 surveillance experts watch the screens. "We're looking for telltale body language, for acting oddly," says Pat Fischer, the hotel's surveillance director. Giveaways include shadowing a legitimate gambler too closely (called rubbernecking); moving methodically up and down slot rows; wearing a jacket too bulky for a desert city.

Once surveillance operators decide you're worth watching, they try to figure out who you are. Facial recognition technology scans faces to see if they match computerized records of suspects obtained earlier. This sort of technology has shown mixed results in airports and public buildings, but it's a backbone of Net Vegas security. "The key is the quality of the database," says Bob Schmitt, general manager of Biometrica, a division of Viisage, the Littleton, Massachusetts, company that supplies many Nevada casinos with the gear.

Five years ago, when the first facial recognition products were introduced to gaming operators, Schmitt commissioned a private eye to gather what turned into the world's largest photographic database of known cheats and hustlers -- about 2,500 records in all. That collection -- dubbed the Surveillance Information Network (SIN) -- is now shared among 160 casinos worldwide. A cheater spotted in one casino on a Saturday night will have his digital image uploaded to the network with an alert. (Though no casino officials will publicly discuss it, many are believed to also use the system to store digital images of known high rollers so they can be treated like VIPs when they walk in the door. "It's just as embarrassing to not recognize your best customer as it is to miss a cheater," Schmitt says.)

"As soon as we get a clean picture," says Tom Pohlman, director of surveillance at the Tropicana, "we freeze the image and map the face." If the cameras don't get a clear picture, there may be hundreds of matches, but the search can be narrowed based on profiles and behaviors -- a predilection for blackjack, for example. Nailing a cheat is a lot easier than pinpointing a terrorist at an airport using the same technology, says Pohlman, because "we've got more time and the ability to search an entire database."

One of the most dramatic uses of casino surveillance systems occurred in June 2000, when a pair of armed robbers rushed a cashier's cage at the Bellagio. Seconds before the heist, a video surveillance officer had spotted a man with a gun. Via radio, the officer instructed casino personnel not to resist the robbery. The thieves grabbed all the cash and chips they could hold and ran out of the building, not knowing that their faces were being captured, their movements tracked by camera after camera as they headed for the exits. Outside, they jumped into a minivan -- whose license plates were also recorded on casino videotape.

"Their pictures and plate numbers were on the six o'clock news that night," Fischer says. The robbers were arrested three days later. The next generation of surveillance technology will be more automated. Under development is a camera with facial recognition software built in. "It works unattended," says Schmitt. Likely positioning: at the top or bottom of escalators, where people are generally looking straight ahead. The SIN database is also being expanded to include full-motion video.

Meanwhile, almost every game in Net Vegas is hurrying to catch up to the slots. Bingo's version of networked slots, for instance, can be found at the Station casinos -- a group of 10 modest gambling halls popular with local players. Most of the Station's bingo rooms have PC-like terminals that let people play many games simultaneously, without ever physically touching an old-fashioned printed Bingo card.

But the real excitement comes from the Jumbo games, which allow all players at Station properties to participate in remote, virtual Bingo action that is broadcast onto computer monitors. A huge pot is spread across multiple locations, Bingo's version of a progressive payoff, with a top win of more than $100,000.

In a sharp break with the past, casinos are even making plans to digitize traditional table games like 21. The Ohkay Casino, in San Juan Pueblo, New Mexico, is testing Digital 21 and SlotJack units that eliminate cards entirely. A live "dealer" hits a button, and cards appear on individual monitors -- one for each player -- and on an overhead screen. Larry Martin, vice president of Digideal in Spokane, Washington, the company that invented the cardless gaming system, plans to have a licensed Nevada distributor by the end of this year.

Casinos like these games because they cut down on math errors and cheating. Marking, memorizing deck locations, and dealer-player collusion still dog the casinos even with today's mechanical card sorters, but it's much harder to hide a virtual card up your sleeve.

Could the human dealer get the heave-ho? Not likely: Table gamblers want the human interaction, just as slot players like the illusion of the mechanical reel. Bill O'Hara, a former senior vice president for sales at PDS Gaming, a previous distributor of Digideal's cardless systems, envisions a future card host who acts more like a bartender: "He doesn't have to add, shuffle, or know the rules. He can't cheat or make mistakes. All he has to do is engage with the customers."

The dealer becomes a Vanna White while the action -- the winning and losing -- is in the circuitry. Why on earth would card players go for this bloodless digital scenario? The same reason slot gamblers like networked play: Cardless systems, like networked slots, can layer on additional action, like supplemental bets, bonus prizes, and, of course, progressive jackpots. Play at the electronic 21 tables is amazingly fast; some casinos report increases in the number of hands per hour of as much as 75 percent.

The next step for Net Vegas will be to weave the town's networks together. Right now, the slots don't talk to the digital cards; surveillance doesn't talk to bingo; casino security systems are only beginning to communicate with one another. (One exception is Harrah's, which has 26 casinos nationwide and tracks the gambling style and behavior of nearly every regular customer through "club" cards.) But the Internet is already enabling casinos to link disparate databanks and surveillance systems, and it will expand the notion of where Las Vegas itself begins and ends.

Net Vegas, fully assembled, will spread beyond the Nevada desert and into your home. The long view: You're playing online in your house in Los Angeles and reach a certain level of winnings. Suddenly, the hotel sponsoring your game makes an offer: Come for three days, everything covered. You'll see some shows and continue where you left off.

In other words, a lifetime running tally. And it may come soon. Nevada recently legalized online gambling, and though it's still forbidden by the federal government, three casinos -- MGM, Hilton, and Station -- are already gearing up with "play" versions planned for their Web sites.

In this scenario, the physical elements of Las Vegas -- glitter, volcanoes, lap dancers, lion tamers -- do not vanish. But, like the arm on a one-armed bandit, or the dealer who doesn't really deal at a digital card table, physical Vegas becomes vestigial, a kind of appendix in a gaming world that has moved to a new level. Not farfetched if you remember that Las Vegas was a sleight-of-hand play from the start: a city where no city should be, a promise of riches to all comers that statistically is never kept. Remember the brutal efficiency Las Vegas lives by.

"Does it make more money?" Bill O'Hara asks. "If the answer is yes, it happens in Las Vegas. It has to."

Dan Koeppel, a contributing editor at National Geographic, has written for Wired and Star Trek: The Next Generation. He lives in Los Angeles.

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